Real Estate agents need to have good legal knowledge and understanding of contract law. This is perhaps the most valuable service that real estate agents provide to their clients. Agents need to know how to not only understand the issues, and potential pitfalls, but they need to educate their clients and avoid catastrophies.

Here are a few scenarios real estate agents might encounter.

Verbal and Written Offers

A buyer brings verbally commits that they are going to bring in an offer, the seller verbally commits to accept it. Then, a second buyer brings in a better written offer, before the written offer actually is received. Who is under contract?

The second offer.

For a contract to be valid the offer must be signed, and communicated. As a real estate agent you need to make sure that the message has been received. The best way to go this is with a phone call.

Real Estate agents also need to make sure that their clients understand how the negotiation process works, and when properties are really under contract.

What Items are Included in the Real Estate Transaction

Are refrigerators included? How about ceiling fans, water shares, propane tanks, and water softeners.

It depends. Fridges are considered personal property. They can be taken or left behind. What matters is what it says in the real estate purchase contract.

Seller Required Repairs

What if repairs aren’t made by settlement as agreed in the purchase contract?

Then an escrow account is set up that will cover the unmade repairs. In the event  that these repairs are not made within a month, then the agreed upon  liquidated damages will be released to the buyer. In reality, this scenario may not work. Lenders often won’t allow escrow accounts, and much of the time the short sale sellers have no equity that can go in the escrow account anyways. When possible, it’s best to just move the closing back until after the repairs are really made.

Contract Cancellation – What happens to earnest money.

After the financing and appraisal deadline, if a buyer wants to cancel, what happens?

For Real Estate in Utah, the seller can either accept the earnest money as liquidated damages, or sue the buyer.

The earnest money should be sufficient to cover the damages. But this isn’t necessarily sufficient, if the buyer didn’t really do all they could to get their loan, the seller could still sue the buyer for damages rather than take the earnest money.

Th safe thing to do is have the financing deadline as close to possible to closing. If anything is going to cancel, do it before the deadline.